August 9, 2018

Good Morning,

Corn and soybeans are both slightly lower this morning with no excitement in the markets ahead of tomorrow’s USDA report. Traders appear willing to sit on their hands with most of their positions until they get confirmation of the USDA’s state by state surveys tomorrow. Producers need to keep in mind that tomorrows numbers are the first official survey of the summer row crops and often produces some serious volatility and surprising yields. The trade is anticipating record large yields, so anything below 176 bpa for corn and 50 bpa for soybeans could open the door to higher prices. Anything above these levels could mean that the highs are in and the market will trend back to the lows made in July.
Ethanol production in the week ending August 3rd was the second highest on record at 1.1 million barrels/day. Stocks were up from 923 million to 963 million gallons. This increase in stocks has resulted in margins in ethanol dropping dramatically this week.
Weekly export sales reported this morning showed old crop corn right on pace with the ten week average at 21.8 million bu. New crop export sales came in at 26 million bu. which is the lowest in the last 4 weeks, but ahead of the ten week average of 20.0 million. Corn exports are ahead of last year and the USDA’s projections for 2018 with only 4 weeks left in the marketing year. Soybeans are well below last year, but right on pace with the USDA’s projections for 2018.
My advice would be for all producers to look at making some cash sales ahead of Fridays report and look to lock in basis sales for new crop corn. (October forward) If we see the CBOT rally, we are guaranteed to see basis depreciate like it has the last two years with adequate carryout.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

August 8, 2018

Good Morning,

Markets were steady overnight with corn up 1 and soybeans up 3 despite news of more sanctions against China. The US announced it will begin collecting 25% tariffs on an additional $16 billion in Chinese imports on Aug 23.
Traders appear content to remain neutral heading into Friday’s report where they will get a state by state estimate of this year’s crop. The average trade guess for yield is 176 bpa with a range of 171-180. Ending stocks are expected to rise from 1.552 billion to 1.636 billion bushels. The average trade guess for soybeans is 49.6 bpa with a range of 48-51.5. Ending stocks guesses average 638 million bushels up 58 from July.
New crop demand is where I am looking for the markets to get help. With lower corn production in South America and the Black Sea region, the US is going to have to cover the world’s production shortages. I believe soybeans will get their support from increased demand as importers come to the US for the cheapest beans on the market despite tariffs. The challenge in both commodities will be the timing of any market rally. Producers that are in need of cash flow or space constraints may not be able to capture any rally we may see. My advice would be for all producers to look at making some cash sales ahead of Fridays report and look to lock in basis sales for new crop corn. (October forward) If we see the CBOT rally, we are guaranteed to see basis depreciate like it has the last two years with adequate carryout.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

August 7, 2018

Good Morning,

Issues with the world’s wheat crop in Russia, Canada and the EU has that commodity trading higher overnight. The wheat strength is not moving corn higher, but is giving it some support as corn trades unchanged this morning. Soybeans have bounced from yesterday’s losses and are trading 14 higher this am in response to yesterday’s crop conditions rating.
Yesterday’s crop conditions report showed corn drop 1% to 71% G/E compared to the five year average of 68%. Wisconsin came in unchanged at 81% G/E compared to the fiver year average of 74%. US soybeans dropped 3% to 67% G/E which is just above the 5 year average of 66%. Missouri continues to lead the trend lower with their corn crop rated 26% G/E and their soybeans at 34% G/E.
For those that say “we don’t matter” when it comes to production, but think the markets should be trading higher because of issues in Missouri here is something to consider: Missouri has ranked in the top ten for corn production just behind Wisconsin in 3 of the last 4 years.
Look for corn to trend sideways into Friday’s report when traders will find out how “BIG” the USDA is expecting this crop to be. Soybeans should remain steady to stronger headed into Friday provided we can avoid any news on the tariff front.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

August 6, 2018

Good Morning,

On Friday private analyst Informa released its crop estimate for the US which came in at 176 bpa and a 14.392 billion bu. production for corn. This is 2 bu. less than FC Stone released on Wednesday, but 2 bu higher than the USDA has been using.

There was no new news in regards to the US and China negotiations over the weekend. Canada’s Foreign Minister did say he is keen on concluding NAFTA negotiations and is ready to talk at any time. The US and Mexico are expected to meet again this week to work on a resolution as well.
Tariffs are not the only issue that could be affecting soybean trade in the near future. China is likely to cut imports of soybeans by more than 10 million tons this year thanks to new soymeal technology and the use of supplements such as sunflower seeds and palm seeds. The use of low protein formula in animal feed could cut China’s annual demand for soymeal by 7% or 5 million tons of soybeans.

The market has been in a short term uptrend over the last couple weeks and we could see additional buying as traders position themselves ahead of Fridays report. The USDA will release its Supply and Demand and Crop Production report on Friday at 11am. This report will show their results of a state by state survey for yield and production on corn and soybeans.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

August 3, 2018

Good Morning,

The US Midwest weather forecast had no major changes as close to average rains and no prolonged heat looks to continue. A front looks to bring rainfall to most areas of the Midwest thru the first half of next week. The 11-16 day forecast has mostly average to above average temps with average precip for the Midwest.
Informa will release its production/yield estimates this afternoon. Expectations are for their numbers to mirror FC Stones estimates which were released on Wednesday. Right now it appears the markets are trading a 176-178 bpa yield in corn and a 49-51 bpa in soybeans. Look for traders to start gearing up for next Fridays report early next week. The funds are currently short 133k corn and 65k soybean contracts.
Demand for corn has continued to be strong and if prices remain low, the export demand could bring carryout below 2 billion bushels even with a yield of 178. (view chart below).

18/19 USDA June est Projection #1 Projection #2 Projection #2
Planted Acres 89.1 89.1 89.1 89.1
Harvested Acres 81.8 81.8 81.8 81.8
Yield 174 178 183 185
Carry in 2027 2163 2163 2163
Production 14230 14569 14969 15133
Available 16307 16782 17182 17347
Feed Use 5425 5375 5375 5375
Industrial Use 7105 7105 7105 7105
Ethanol Use 5625 5625 5625 5625
Exports 2225 2400 2400 2400
Total Use 14755 14880 14880 14880
Carryout 1552 1902 2302 2467

In my opinion only a yield of 174 or less will move this market higher. The export estimates above in projection 1,2 and 3 are assuming that trade negotiations between the US and our partners gets worked out. China is preparing to retaliate in the escalating trade war on tariffs on about $60 billion worth of US goods. The import tax could range in rates of 5 to 25 percent. The implementation date of the taxation will be subject to the actions of the US. This statement came in response to yesterday’s news that President Trump would like to increase tariffs up to 25 percent.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

August 2, 2018

August 2, 2018

Good Morning,

Markets currently trading three higher on corn, and five lower on soybeans. Yesterday’s loss of seven cents was attributed to a couple different factors, including: much favorable forecast change, and rumors of larger tariffs on imports from China.

FC Stone released yield estimates of 178.1 bushel for corn and 51.5 bushel for Soybeans. Reports are coming in across the Midwest of elevators and farms a like with large quantities of old crop corn to move before fall. This is concerning for farmers with an expected large harvest soon approaching and higher demand for truck drivers taking away from grain hauling. USDA had ethanol yield at 2.88 gl/bu in May, below last year, and another reason demand has gone up.

Below are firm offer levels to consider:

Old Crop – Call for options
Fall Delivery – $3.65-3.75
Spring 2019 Delivery – $3.80-3.90
Summer 2019 Delivery – $3.90-4.00

Have a Great Day!

Mitch Giebel
920-348-6861
mgiebel@didionmilling.com

August 1, 2018

August 1, 2018

Good Morning,

Markets currently trading two lower on corn and fourteen lower on soybeans. Lower market is led by a much more unstable forecast, versus yesterday’s outlook, as well as profit taking at the beginning of the month.

With the first day of August upon us, we need to realize what seems to be a great crop overall. Most areas to the south are well developed, and our area is pretty far along on development. August updated yield report is just around the corner, and likely not going to lower corn yield from 174. With these pieces of news, below are some targets to consider if we do see some hot/dry weather premium:

Old Crop – Call for options
Fall Delivery – $3.65-3.75
Spring 2019 Delivery – $3.80-3.90
Summer 2019 Delivery – $3.90-4.00

Have a Great Day!

Mitch Giebel
920-348-6861
mgiebel@didionmilling.com

July 31, 2018

Good Morning,

Significantly stronger markets this morning with corn up 5 and soybeans up 20 to start the day. Reports from Bloomberg that the US and China are going to resume trade talks has traders optimistic that demand will resurface sooner rather than later for beans. Some added heat in the forecast could add to worries in parts of IA and MO, but may be welcome for the rest of the Midwest as heat could add to the test weight.
Last nights crop conditions report showed corn unchanged at 72% G/E, but I view this number as misleading. Corn conditions dropped in every state except MN, SD, CO, TX, PA and NC. Of those, only MN and SD produce any volume of corn. The worst state continues to be MO which came in at 33% G/E. WI dropped 2% to 81% G/E. Soybeans were similar with the US ratings unchanged at 70% G/E. The only states to increase were SD, IA, MS, NC. MO is also the lowest here at 40% G/E.
Corn has traded higher 11 of the last 12 days with today’s rally. The funds bought 6000 sb and 7000 corn contract yesterday. They are estimated to be short 133k corn and 63k soybeans. With today being month end I would expect to see more buying as traders cover their shorts. Do not be surprised if we see some retracement tomorrow with the beginning of the month.

Producers should be putting in firm offers for new crop (fall/spring and next summer delivery). I would target the following levels for sales:

Fall Delivery – $3.65-3.75
Spring 2019 Delivery – $3.80-3.90
Summer 2019 Delivery – $3.90-4.00

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

July 30, 2018

Good Morning,

The markets are slightly higher this morning with corn up 4 and soybeans up 6. Weather concerns around the world have pushed prices, with crops getting smaller in some areas.
As of last week the Brazilian second crop corn harvest reached 49%, in increase of 13% over last week but still 55% behind the 5 year average. Due to dry conditions and no rain to speak of in the forecast, many farmers are choosing to let the crops naturally dry in the field saving on cost. The Brazilian second crop is currently projected at 57.1 mmt, down over 10 mmt from last year.
There is a lot of talk about how good this corn crop will be and so far it does appear to be racing towards the finish line without many issues. Many expect the yields will be comparable to last year if not larger. There is some concern that the absence of heat may have kernel depth and ear weights lower than last year that will keep us from reaching the full potential.
The US Midwest forecast has precipitation running less than average the next 10 days with temperatures expected to be warmer to above average. The 11-16 day forecast has ridging for the central 2/3rds of the country bringing above average temperatures and below average precipitation to most of the Plains and Midwest.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com

July 27, 2018

Good Morning,

Corn is up 2 and soybeans are up 10 to start the last day of trading for the week. All commodities have had a good week as corn is up 8, soybeans up 20 and wheat up 20 so far on the week. We have seen more farmer selling this past week as producers take advantage of the recent move higher to move old crop bushels ahead of harvest.
The US and EU trade relations appear to moving in a positive direction which should support grains. Both sides have agreed to move forward on removing tariffs between the two. This agreement isn’t likely to increase corn exports, but does give the markets some positive political news.
8 of the last 10 trading sessions have seen the funs buyers of corn which has reduced their net short position from 153k to 129k. If we could get some more traction on the tariff front in the next couple weeks we could see this this trend continue.
Fundamentally the corn market is trading 20-25 cents below where I think it should be given stocks, demand and the potential size of this years crop. Whether or not we see the market correct is unknown. Producers locally need to be prepared if we don’t see this rally and make sure they have plans in place for this years crop.

Have a Safe Day!

Garry Gard
920-348-6844
ggard@didionmilling.com